Alphabet's aggressive push into artificial intelligence is fueling strong growth in its advertising and cloud businesses, while the company plans to nearly double capital spending in 2026 to lead the AI race.
The Google parent reported fourth-quarter revenue of $113.8 billion, up 18% year-over-year and beating analyst expectations. Net income rose 30% to $34.5 billion (or $2.82 per share). Google Cloud revenue surged 48% to $17.7 billion, driven by demand for AI infrastructure and solutions.For the full year 2025, Alphabet achieved a milestone with revenue exceeding $400 billion for the first time, reaching approximately $403 billion (up 15%), and profit of about $132 billion.
The company dramatically raised its 2026 capital expenditure guidance to $175 billion to $185 billion, roughly double the $91 billion to $93 billion spent in 2025. The increase focuses on building data centers, servers, and other infrastructure to meet exploding AI compute demand and train/run advanced models. CEO Sundar Pichai emphasized balancing rapid scaling with long-term efficiency amid challenges like power supply constraints for data centers.
AI momentum continues to accelerate: The Gemini app now has over 750 million monthly active users, and the launch of Gemini 3 marked a key milestone. AI features are boosting search usage and early monetization efforts, while YouTube's annual revenue surpassed $60 billion across ads and subscriptions.
YouTube's combined revenue from advertising and subscriptions surpassed $60 billion in 2025, driven by strong performance in both areas. This milestone was revealed in Alphabet's fourth-quarter 2025 earnings report, released after the market closed on Wednesday.
The company now boasts more than 325 million paid subscriptions across its consumer services, with Google One and YouTube Premium leading the growth.
During the earnings call, Alphabet and Google CEO Sundar Pichai highlighted YouTube's dominance in streaming, noting that it has been the No. 1 streamer in the U.S. for nearly three years, based on overall living room watch time according to Nielsen measurements.
Other key highlights from the report include:
- In October 2025, viewers consumed over 700 million hours of podcasts on living room devices—a 75% year-over-year increase.
- YouTube Shorts now averages 200 billion daily views, with growing traction specifically in the living room environment.
- YouTube TV continues to attract significant interest, particularly in its skinny bundle options.
These figures underscore YouTube's expanding role in both mobile/short-form and traditional living room viewing, as well as its success in monetizing through ads, premium subscriptions, and bundled services.
Alphabet shares experienced volatility in after-hours trading following the results and guidance. The company faces ongoing antitrust scrutiny, including a recent federal ruling limiting exclusive default search deals (though avoiding harsher remedies like divesting Chrome, partly due to increased competition from AI players). A separate ad tech monopoly case continues.
Other tech giants like Microsoft, Meta, and Amazon have also reported strong AI-related results recently.